“Today’s gap down opening was a typical reaction when market enters early stages of correction. It was backed by the negative news flow on the global front and also domestically, the earnings have been disappointing from the leading conglomerates. Despite some recovery in the first half, the Nifty eventually closed tad above the 9700 mark with a cut of more than a percent.
Today’s corrective move was no surprise to us as we have been cautious on the market and were expecting this pessimism to extend towards 9700 in a day or two. Now, looking at the daily and weekly chart, we believe that the much awaited correction is in the early stages now and we would continue to see market remaining under pressure for next few weeks. Immediately, the daily ’89 EMA’ level of 9600 – 9580 is to be tested soon. Since, it’s a major level in the near term; the index may respect it for a while. But, eventually, after a minor bounce back or consolidation, we expect the index to sneak below it. Traders are repeatedly advised to remain light and avoid taking undue risks as individual stocks may continue correcting in next few days. On the flipside, 9770 – 9852 is likely to act as a strong resistance zone in the near term.”